S&P Global’s May IFR Outlook looks to a decarbonised world economy

May 13, 2016

The latest issue of Infrastructure Outlook from S&P Global – which brings together the key infrastructure and project finance-related research and rating update news from the past month – focuses on why growth in the green bond market will be key to a sustainable world economy. Exploring the success of this nascent market, Michael Wilkins, head of global environmental & climate risk research and author of the front page feature, suggests that by building on prominent recent green bond issuances by Apple, EDF, Toyota and Barclays, billions of dollars of investment stand to be raised for environmental purposes. Wilkins predicts that if the green bond market can continue to tap the potential of issuers in emerging economies – such as Brazil, India and China – as much as $28 billion could be raised in green bonds this year. Meanwhile, companies in a range of industries are increasingly turning to the green bond as a means of sourcing funds, motivated by greater pressure to disclose environmental records. Wilkins notes that continued success will depend on sustaining such transparency, pointing out that the market still has a way to go before reaching maturity.

Less optimistic is the outlook for liquefied natural gas (LNG). In a second prominent feature this month, Simon Redmond, director and commodities specialist, offers an overview of the industry for the year ahead, warning that given a glut in supply and downward price trends, the LNG market will not enjoy the stability it has found in the past anytime soon.

Moving from up-stream to down-stream, the issue takes an in-depth look at the outlook for utility companies worldwide. Here, Diane Vazza, New York-based managing director, offers her insights into the growing potential for ratings downgrades, suggesting that there is higher risk in the sector than in the past due to continued low commodity prices, while senior credit analyst Tania Tsoneva explores the factors underpinning European utilities’ senior unsecured debt transactions.

In other news, S&P has adjusted its ratings for French-based energy company ENGIE, Austrian utility company Verbund, and a Maltese power distributor Enemalta, while assigning the UK’s Northumbrian Water Group a ‘BBB’ rating.

The issue also covers the effects of a long-running dispute between a healthcare trust in Newcastle and its contractor, the rating of a Dublin airline company and an Italian toll road, as well as the construction of a group of school buildings in Yorkshire.

To view these articles and more, please see the full version of S&P’s May infrastructure newsletter in PDF or e-book format.